The insurance industry in Saudi Arabia has developed significantly over the last decade, according to a report by rating agency AM Best.
The report, "Saudi Arabia’s Insurance Market Adapts to Dramatic Change", found that while insurance penetration in Saudi Arabia is still relatively low, it has grown rapidly in the past few years.
“The introduction of compulsory health schemes, which began with expatriates from 2006, has been a major driver of growth in recent years,” said Mahesh Mistry, associate director of analytics at AM Best.
“Health represented 53 percent of gross written premiums in 2010, compared to 32 percent in 2006, in a growing market.
“The majority of business retained by Saudi insurers is retail, in particular, motor and medical, which creates a challenging operating environment for insurers given the competitive nature of these products. Moreover, persistent low rates as a result of intense competition and the zakat burden faced by companies are likely to continue to create a difficult operating environment and pose a risk to shareholders’ equity.”
Saudi Arabia, insurance industry, AM Best, automotive, healthcare